October Surprise: Finally, Time for the Truth

By Robert Parry

Jamshid Hashemi looked wearier than he did seven years earlier, his complexion was waxier, befitting a man with a serious heart condition. The U.S.-Iranian arms merchant/businessman also was in more legal hot water from his work with an American company which collapsed in an allegedly fraudulent stock scheme.

But Jamshid Hashemi's account of the political intrigue that surrounded the 1980 Iranian hostage crisis -- plotting that allegedly undercut President Carter's negotiations to free 52 Americans and ensured Ronald Reagan's election -- has changed little over the years. In that way, Jamshid Hashemi remains potentially one of the most important witnesses to the unsavory acts that may have launched the Reagan-Bush era.

Jamshid Hashemi still claims that in the summer of 1980, he and his brother, Cyrus, participated in secret meetings involving William J. Casey and Iranian intermediaries representing Ayatollah Ruhollah Khomeini. In a recent interview with The Consortium, Jamshid Hashemi repeated his account that meetings in Madrid, Spain, in late July and then in August, 1980, resulted in an agreement to release the 52 American hostages only after Reagan took office. In exchange, the radical Iranian government got commitments for secret shipments of U.S. military supplies.

"I thought it was my duty that the people in the United States should know," Hashemi told me during an afternoon-long interview at a hotel near Heathrow Airport outside of London. "They should know, they should be the judge of it."

Though Hashemi sat through the lengthy interview with the same gentlemanly style that I encountered when I first met him in 1990, he did flash with anger when he discussed the House inquiry that examined the October Surprise controversy in 1992 and issued a report in January 1993 clearing the Republicans.

"Rubbish, that's what I think," steamed Hashemi. "Just a whitewash of the whole situation. It's a cover-up."

Hashemi argued that it made no sense for him to have invented his October Surprise account which he repeated under oath to Congress in 1992. He had nothing to gain by making the public charges -- and a great deal to lose, he said. "Who has ever paid me a single dime?" he asked. "I had to pay all my lawyer's fees. What did I gain here?"

Hashemi blamed the cover-up primarily on the attack strategy of Republican lawyers on the task force, particularly Richard Leon, who was the senior GOP investigator, a role similar to Leon's post on the 1987 House Iran-Contra investigation, in which the Republicans issued a minority report clearing Reagan and his subordinates of all wrongdoing in that scandal, too. Hashemi said Leon, rather than task force chief counsel Lawrence Barcella, appeared to be running the October Surprise investigation.

"I found this Mr. Leon -- who I knew as the 'fat man' -- every time we had a break and my lawyer would go to the washroom, he would rush into my room where I was sitting and say, 'come on, change the story'," Jamshid asserted. "I said I would not change my story at all. The last time he opened the door, I said, 'Get out of my office. If you have anything to say, say it in front of my lawyer."

Hidden Evidence

Leon and the Republicans did succeed in getting the task force to reject the October Surprise allegations lodged by Hashemi and more than a score of other individuals. Those other witnesses included: former Iranian president Abolhassan Bani-Sadr (who gave a detailed account of the Iranian-Republican contacts from his view in Teheran), senior officials of the Palestine Liberation Organization (now including PLO chairman Yasir Arafat, who has described overtures from Republicans to interfere in the hostage crisis), French intelligence chief Alexandre deMarenches (who told his biographer about secret GOP-Iran hostage meetings in Paris), and Ari Ben-Menashe (a former Israeli intelligence officer who described Israel's behind-the-scenes role in helping Reagan seal the October Surprise deal).

As The Consortium reported in its first issue in December 1995, the House task force also hid a report from Russia's Supreme Soviet which recounted Moscow's intelligence information that also placed Casey, George Bush and other leading Republicans meeting with Iranians in Europe to arrange a politically favorable outcome to the 1980 hostage crisis. The Russian report arrived in Washington on Jan. 11, 1993, two days before the task force report was released reaching the opposite conclusion.

Instead of making the Russian report public, the task force stuck it in a cardboard box that was filed away with other classified and unclassified material from the investigation. I found the Russian report in a box when I examined the task force's raw documents. [The Russian report is reprinted in full in The October Surprise X-Files: The Hidden Origins of the Reagan-Bush Era. ]

While concealing the Russian report and other supportive evidence, the House task force hammered at the witnesses who had alleged an October Surprise deal. In January 1993, leaks from the task force suggested that Jamshid Hashemi and Ben-Menashe would be referred for prosecution on perjury charges. More than four years later, no such charges have been filed. But Washington's "conventional wisdom" still refuses to accept the possibility that the Reagan-Bush campaign blocked Carter's hopes for a pre-election hostage release, the so-called "October Surprise."

In the recent interview near Heathrow, Jamshid Hashemi agreed for the first time to present his October Surprise claims on video tape. He also explained more of the background about how he and his late brother, Cyrus, came to work for the CIA and to know Casey, who ran Ronald Reagan's presidential campaign in 1980. After Reagan took office in 1981, Casey became CIA director, a position he held until fall 1986 when he collapsed in the early days of the Iran-contra scandal. Casey died of a brain tumor in May 1987.

Most importantly, Jamshid Hashemi's latest account traced the connections between his brother Cyrus and a close Casey associate, John Shaheen, back to the late 1970s, when Cyrus was operating his Caribbean-registered First Gulf and Trust bank out of offices in Manhattan and London.

Casey & Friends

Shaheen, a Lebanese-born American, had served with Casey in the Office of Strategic Services, the World War II-era predecessor to the CIA. After the war, Shaheen and Casey remained friends and became business associates. Casey, a lawyer at the politically well-connected firm of Rogers and Wells, advised Shaheen on a troubled oil refinery that Shaheen built at the wind-swept coastal town of Come-by-Chance, Newfoundland. Shaheen and Casey also kept their hands in the intelligence business and maintained close ties to the CIA. Cyrus became a third figure in the triangle.

"For many years, he [Cyrus] had been cooperating with Mr. Shaheen," Jamshid told me. "I asked him [Cyrus] in 1979, at the end of 1979. He was very open about it. He knew that Mr. Shaheen had contacts with the government of the United States. At that time, I did not know which section or which organization."

In Iran, the Hashemis were politically well-connected businessmen who had supported the Islamic revolution that ousted the pro-U.S. shah from power in 1979. Jamshid Hashemi received an appointment from the new government to oversee the national radio network, which put him in touch with other influential Iranians. One was a radical Islamic cleric, named Mehdi Karrubi. Another was his brother, Hassan.

"As I was running the radio, Mr. Hassan Karrubi came as a representative of the Iman [Khomeini.] From that day, I was sitting at one side of the table and he was sitting at the other side of the table, and we were running ... the different radios of Iran."

Meanwhile, outside Iran, Cyrus Hashemi's First Gulf was emerging as a bank which handled clandestine money transfers for the new Iranian government. Jamshid Hashemi recalled that when Teheran feared that Iranian navy funds might be frozen at banks in the United States, the United Kingdom and Germany, arrangements were made to shift the funds into First Gulf and then into newly created offshore banks.

"It was ordered that all these monies be transferred to an account of my brother, into his bank, which was done. The order of the transfer was from Admiral [Ahmad]] Madani [Iran's defense minister]. We went to the admiral with the telex and then we went to the war room of the navy in Teheran and we faxed it ... so he [Cyrus] could take over all the money, in late 1979, $30 to $35 million, to the account of the First Gulf."

"After this money came in, to the best of my knowledge, both Cyrus and Mr. Shaheen were advised by Mr. Casey. He was the man who was actually putting all these things together for both of them in some foreign country at that time. I didn't know which foreign country, but later on I found out that a bank had been physically opened in the Philippines and in Antigua [for Cyrus and Shaheen]. Casey was the adviser. ...

"On one occasion, ... Mr. Shaheen had come to [Cyrus's] house and they were discussing this matter of where to open the bank. Mr. Shaheen said that he was going to talk with and get advice from Mr. Casey whether the Philippines or this Caribbean city was the best place to open. ... I now know for a fact that in both the Philippines and Antigua they had banks."

Fateful Call

In late 1979, Jamshid Hashemi also received a fateful call from his brother, Cyrus, who summoned him from Iran to London. "I actually came for the purpose of getting funds for Admiral Madani's campaign to become president of the country [Iran]," Jamshid said. "I did not plan to come to the United States at the time because we thought that through my brother we would get the necessary help. ... Once we came here [to London], my brother told me that the American government very much wanted to see and talk to me before I went back to Iran."

It was during that London stopover that Jamshid said he met John Shaheen. "Mr. Shaheen was an elderly gentlemen of 60-62 at the time. I met him at the [London] office of my brother's bank, First Gulf and Trust. He had white hair and probably was an inch taller than me. ...

"He came and took my passport. I said if he wanted to get an American visa for me, he should not get it in my passport. He said he knows all about it, that I don't need to tell him. He knows what sort of visa I need on a piece of paper, and that is exactly what the next day I have, my passport with a piece of paper with a signature giving me a multiple entry visa into the United States. ... In those days for an Iranian to get a visa within a few hours, it would have been a miracle."

But after arriving in the United States on Jan. 1, 1980, Jamshid soon figured out that Shaheen's links to the CIA explained the miracle. "At the first meeting which I had with Mr. [Harold] Saunders [a Carter administration diplomat], there was a man who was introduced to me as from the White House who I later learned was not from the White House by the way. ... He was a CIA man. I believe he is now at one of the universities."

"Harvard?" I asked. "You mean Charles Cogan?" Cogan had been chief of the CIA's Middle East operations.

"Yes, Charles Cogan. He was introduced to me under another name as a man from the White House. He asked me if everything was okay with the visa and so on. I showed him this is what we have. ... He said, 'yes, we know Mr. Shaheen.' He spoke very highly of Mr. Shaheen."

The CIA gave the Hashemi brothers $500,000 to deliver to the struggling Madani campaign. But only a small amount reached Iran -- about $100,000 -- and Madani lost badly to Abolhassan Bani-Sadr. The Hashemis returned $290,000 to the agency.

Money Mover

But Jamshid Hashemi told me that Cyrus Hashemi's role as a covert money mover was not limited to the Madani campaign. He said Cyrus also was called upon to transfer U.S. government money into the Dominican Republic and into Lebanon. "My brother, on the order of someone in the CIA," sent $1 million to a leading politician in the Dominican Republic, Jamshid stated. "They used to worship my brother in Santo Domingo."

Shaheen and Cyrus also teamed up for delivery of money into Lebanon, where Washington fretted about growing political unrest. Shaheen and Cyrus "had certain political ... interests in Lebanon ... which was very important in those days," Jamshid said.

"One time my brother had forgotten a briefcase. ... Then, he called his house to tell me that he had forgotten his briefcase and could I bring it to him to the bank in New York. ... As I got to New York when I pulled this thing out, it came off, and [the briefcase] was loaded with money. There was a note of a name of gentleman in Lebanon."

Cyrus gave the suitcase to "an Indian gentleman ... and said take it on the first plane to Beirut," Jamshid continued. "All of this was very unusual and since I know that the gentleman [in Lebanon] has a ministerial post, all this put together with the relationship with Mr. Shaheen -- they were definitely doing something in Beirut at that time."

"You think it was more an intelligence activity?"

"Right, absolutely. It was an intelligence activity."

Cyrus Hashemi and John Shaheen also mixed business with their politics. When Shaheen's Canadian refinery went bankrupt and defaulted on its provincial bonds, Canada froze all of Shaheen's personal assets. To bail himself out of the trouble, Shaheen sought help from Cyrus, who arranged a secret $3 million loan for Shaheen through Marine Midland Bank in London. The money was funnelled into a Shaheen front company, called Mid Ocean, in Bermuda.

While the Shaheen-Hashemi relationship was growing, their other mutual acquaintance was rising in national prominence. After the 1980 New Hampshire primary, William Casey took over Ronald Reagan's then-troubled campaign. Casey was soon applying his lawyerly skills and intelligence training to devise a winning strategy. One possibility that haunted Casey was the prospect that Carter might time the release of 52 U.S. hostages then held by radical students in Iran to benefit him during the final weeks of the campaign.

A Visitor

For seven years now, Jamshid Hashemi has alleged that Casey's obsession with the so-called October Surprise led the lawyer-spymaster to appear one night in March 1980 at Jamshid's room at the Mayflower Hotel in Washington. "The door was opened and Mr. Casey came in," Jamshid told me. "He wanted to talk to me. I didn't know who he was or what he was. So I called my brother on the phone. I said, 'there's a gentleman here by the name of Mr. Casey who wants to talk to me.' I remember that my brother asked me to pass him the phone and he talked with Mr. Casey. ... The next time I saw Mr. Casey was in Madrid."

The alleged Madrid meeting, along with other supposedly secret contacts in Paris, rest at the center of the October Surprise mystery. The long-whispered allegations of Republican interference began to receive serious attention only in 1990-91, in part, because of off-camera interviews that Jamshid Hashemi gave to former National Security Council official Gary Sick and to me at Public Broadcasting Service's Frontline program. Jamshid Hashemi expanded on his claims to ABC's Nightline program, also off-camera.

Republicans, frantic to protect President Bush's re-election hopes in 1992, concentrated on trying to establish alibis for Casey for the last weekend of July 1980 and thus prove that Jamshid Hashemi lied. Two different sets of alibis were advanced. The first, picked up by The New Republic and Newsweek magazines, put Casey in London on a day in late July when Jamshid had Casey in Madrid. But that alibi collapsed when Americans who were with Casey in London remembered him arriving a day late for a scheduled conference.

The second alibi, embraced by the House task force, put Casey at the Bohemian Grove, an exclusive California resort, on the last weekend of July and thus not in Madrid. But documentary evidence in Casey's records and at the Grove showed conclusively that Casey went to the Grove the first weekend of August 1980, not the last weekend in July. the task force had the wrong weekend. [See The October Surprise X-Files or Trick or Treason. ]

In the recent interview near Heathrow, Jamshid Hashemi repeated, essentially, the same story about a Madrid meeting in late July 1980. "I was asked by my brother, since he thought the Republicans had the possibility of winning the election, that we should not play only in the hands of the Democrats. [Cyrus said] it was the wish of Mr. Casey to meet with someone from Iran. That's when I started getting on this work of inviting both Mehdi [Karrubi], to come directly, and Hassan [Karrubi], to come indirectly to Madrid. ...

"I contacted them by telephone from here [London]. We had scramblers. He [Hassan] had a scrambler and I had a scrambler. Other times I used to fly to different cities in Europe [to contact him]. ... He came [to Europe] with a mission to purchase some commodities. I think it was Denmark."

To Madrid

Jamshid said he then took a private plane to Hamburg, West Germany, where he picked up Hassan Karrubi and flew him to Madrid. "I explained everything [to Hassan Karrubi] aboard the plane," Jamshid recalled. "When we got to Madrid, we went to the Plaza Hotel. We registered there under different names. Mehdi Karrubi was [already in Madrid and staying] in the [Iranian] embassy. ..."

"Casey came with another gentleman who was American," Jamshid continued. "There were two meetings, that we had at different dates. ... What was specifically asked was when these hostages should be released and it was the wish of Mr. Casey that they be released after the inauguration. ... The result was that it was agreed that the hostages would be released after the inauguration date of Mr. Reagan."

"The payments?" I asked.

"Arms, a series of arms."

Jamshid Hashemi said there was a follow-up meeting in Madrid around mid-August, when Mehdi Karrubi affirmed Khomeini's approval of the deal with the Republicans. "It was the confirmation that it will be done that way," Jamshid said. "He [Mehdi Karrubi] spoke for Khomeini, definitely." Jamshid added that other sessions between the two sides followed in Paris.

Throughout the long October Surprise controversy, Jamshid Hashemi has never publicly backed other claims about Paris meetings which have been made by a number of other figures, including the late French intelligence chief deMarenches and Israeli intelligence official Ben-Menashe. But in the video-taped interview near Heathrow, Jamshid declared that "something had happened in Paris. There definitely was more than one meeting in Paris."

Still, Jamshid expressed nervousness about listing who attended the various Paris meetings. "I do know for a fact that more meetings did take place, but it would be stupid for me to talk about what happened in France because people who are powerful now they're also aware of what was going on or they participated in it. And I am a very small person with enough problems. I believe that some of the problems have been caused by the people who wished I never existed." ~